A teaser rate is a temporarily low interest rate offered on a loan product. It may be called an initial rate, introductory rate or discount rate, according to the Consumer Financial Protection Bureau. In the mortgage world, teaser rates are most commonly associated with adjustable-rate mortgages. The teaser rate period may last three, five seven or 10 years, but once it expires it typically adjusts annually.
Many home equity line of credit (HELOC) lenders offer teaser rates to their customers. Check the fine print for qualification requirements, and make sure you can afford the payment once the teaser rate period ends. You can also refinance a teaser rate loan to a fixed-rate loan in the future, if you qualify.